Rob Mooth, Vice President, BASES Client Consulting and Mike Asche, Vice President, BASES Client Consulting, The Nielsen Company
SUMMARY: Megabranding can be an effective strategy for marketers to drive growth and efficiency from power brands across related product categories under the right conditions. Executing the strategy successfully involves careful understanding of the brand’s specific equity and leveraging it for competitive advantage with robust marketing support.
|Many are attempting to produce greater efficiency from fewer brands…|
Do more with less—the mantra being echoed in both businesses and homes. In today’s retail marketplace, increased fragmentation, shrinking store footprints, rising commodity costs, and stretched consumers are creating unique pressures on branded products. As marketers create business plans to address these issues, many also are attempting to produce greater efficiency from fewer brands. This gives rise to the notion of “megabranding” as a way to economize costs and grow broader, stronger franchises that are more resilient to these forces.
Megabranding is when a brandmark is applied across multiple product extensions and flankers that satisfy a variety of consumer needs across different categories. For example, Clorox is considered a megabrand because the broad use of the brand stretches across laundry, home cleaning/disinfecting and small durables. On the other hand, while Coca-Cola is a global powerhouse brand, it has predominant representation in the carbonated soft drinks category alone.
Marketers are considering megabrand strategies to increase marketing and operational efficiency across a number of potential fronts:
- Media—spots that support multiple complementary items under an umbrella strategy deliver a greater return on investment
- Copy development—reducing the number of creative executions presents a savings opportunity
- Trade line promotion—folding multiple products into more impactful trade promotions result in improved efficiency and compliance
- Consumer promotion—bundling can improve efficiency and breakthrough
- Leverage transaction size vs. penetration—it is easier to get a brand’s current consumers to buy more than to gain the same volume from a new buyer
Sustainable competitive advantage
While operational efficiencies are vital, the consumer issues related to megabranding are just as important. The first step to crafting a winning megabrand strategy and creating sustainable competitive advantage is understanding the brand’s unique equity. Misreading the brand’s meaning is the biggest strategic error in megabranding. Brands that fail to meaningfully connect with consumers as they migrate into new categories can lead to disastrous outcomes. We believe Gatorade’s failed 2001 attempt to extend into meal bars is a good example of misread equity. In consumers’ minds, Gatorade likely represented “hydration” rather than “nutrition” or “performance” and did not form a solid link to the meal-bar category.
|Misreading the brand’s meaning is the biggest strategic error in megabranding…|
Most brands lack distinctive, specific perceptions and do not differentiate on the basis of unique attributes or associations. Brands may be well known and have generally positive overall perceptions relative to competitors, but these more general perceptions are usually not a sufficient strategic rationale for cross-category extension. For this reason, many brands do not have a strong opportunity for generating competitive advantage from megabranding.
The basic foundation of successful megabranding starts with identifying a unique and ownable equity for the brand. Executing the strategy successfully involves understanding how the brand’s unique equity can be relevant and leveraged for a competitive advantage.
Brands produce value for consumers in a variety of ways. First, strong brands help to establish credibility with the customer. Well-known brands can do this if the brand’s equity is relevant to the destination category. At a higher level, impactful megabranding strategies leverage perceptions that are specific to the brand in a way that enhances consumer value.
|The equity must bring a unique benefit…|
Successful megabrands are built on a foundation of “unique relevance”—identifying a consumer benefit that can be transferred to build competitive advantage in another category. Beyond being well-known, the equity must bring a unique benefit to the destination category. Three case studies illustrate the point:
- Special K snack bars introduced in 2002 were a major success. Although the meal-bar category was well-populated, Special K’s unique value proposition of health and weight management benefits was a great fit with the lifestyle of the brand’s target.
- Crest’s successful entry in 2001 into home whitening kits was aided by its strong equity and clinical angle. While other oral care brands also have strengths, we believe few could have developed this new category as effectively.
- Olay’s entry into cosmetics in 1999 failed. While Olay is a strong brand with many successful extensions in skin care, its equity brought nothing uniquely relevant to the competitive cosmetics category.
When marketers seek viable options for exporting a megabrand into an adjacency, rarely do they find opportunities to improve delivery on current primary consumer needs. Instead, destinations for megabrand equities often call for “activating” a secondary consumer need. That is, elevating the role of a less critical need to a more influential role on consumer purchasing decisions. Successful megabranding often is the result of activating needs that were less influential because no brand was currently focused on that need. Brands that succeed have a strong core strategy and a sizeable marketing investment to energize this shift in consumer thinking and behavior.
|Brands that succeed have a strong core strategy…|
Clorox capitalized on the sustainability trend when it activated the eco-friendly driver in home cleaning with its 2008 introduction of Green Works. Being the first mainstream brand to get a substantial portion of the market to think differently, Green Works generated significantly higher volume than the leader in this segment and helped grow the environmental cleaning category 40% in its first year.
Credibility carries clout
Big names carry weight and can also do wonders when introduced into underdeveloped markets and segments just by lending credibility to the mix. For example, the fledgling brand Clean Shower was slowly building the daily shower cleaner category in the late 1990s when Tilex, Scrubbing Bubbles and Lysol entered the fray, which instantly legitimized the category for consumers and volume responded. While the expected return from this basic strategy may be modest, it can be executed quicker and with less risk.
|Find the specific equity and how it is relevant and transferable…|
Brands with strong sales are good potential candidates for extension and megabranding, but this is not necessarily the most critical factor. A strong and specific equity may be the more important issue for creating a megabrand platform. The key is to find the specific equity and how it is relevant and transferable to a different category. Sometimes big brands do not have the flexibility for megabranding, but smaller brands might.
For example, Mr. Clean was a relatively small brand in the U.S. through 2002, selling dilutable cleaners with a 10% share of the market. But the brand had broad awareness and recognition, a strong cleaning equity, and an iconic visual equity. When Procter & Gamble launched Mr. Clean Magic Eraser in 2003, it leveraged its equity to establish credibility for this novel product.
Invest for growth
The fact is, megabranding programs are typically only as effective as their marketing support. Most marketers do not employ megabranding as just an efficiency play. Rather, they view it as an opportunity to grow volume and share. While there is no single support strategy that fits all cases, it is clear that most marketers have devoted substantial marketing support to capitalize on megabranding initiatives.
|Most successful megabrand strategies do not place great weight on family messaging…|
As support is allocated, we believe in most cases that dedicated support for the adjacent extension is important. There is a logical attraction to brand-family communication strategies given the potential for marketing efficiencies. However, most successful megabrand strategies that we have examined do not place great weight on family messaging. In most cases, a critical need exists to educate and convince consumers about the megabrand’s relevance in the adjacency. Family messaging may play a role later in the megabrand’s evolution, but in the introductory time period, more focused support should usually be the priority.
Occasionally, a megabrand strategy is implemented as a swapout of an existing equity for a megabrand. In this case, a co-branded approach is wise. A timely example exists in dish care, where Reckitt-Benckiser is replacing Jet-Dry for the Finish brand on its rinse aids, and also converting its Electrasol detergent to the Finish franchise. As the Finish branding is implemented, there is a visible co-branding for at least an introductory period and a healthy level of media support for the megabrand. This approach provides clarity for Jet Dry and Electrasol consumers.
|Understand what the brand represents in consumers’ minds…|
Megabranding can be a successful strategy for generating marketing and operational efficiencies as well as overall brand growth; however, to realize these advantages, the strategy must be carefully navigated. A successful strategy requires that the manufacturer clearly understands what the brand represents in consumers’ minds and makes the right choices on how the brand’s unique equity can be relevant to the category and leveraged for a competitive advantage.
Successful megabranding also requires a commitment to support the brand as it works to extend itself into new categories. When a manufacturer can identify the right equity, leverage it in a relevant category in a meaningful way, and vigorously support the initiative, the ingredients are in place to turn a megabranding strategy into a megasuccess.
Read more about how to turn a megabrand into a megasuccess in Nielsen’s recent report.